Insurance Law - Insured's duty to disclose all material facts truthfully in insurance contracts

National Consumer Disputes Redressal Commission Upholds Insurer's Right to Repudiate Claims for Non-Disclosure of Material Facts The NCDRC affirms ICICI Prudential's decision to deny a claim due to the insured's failure to disclose pre-existing medical conditions, reinforcing the principle of utmost good faith in insurance contracts.

In a significant ruling, the National Consumer Disputes Redressal Commission (NCDRC) in New Delhi has upheld the decision of ICICI Prudential Life Insurance Company Limited to repudiate an insurance claim on the grounds of non-disclosure of material facts by the insured. This judgment underscores the critical importance of the doctrine of uberrima fides, or utmost good faith, in insurance contracts.

The case revolved around a life insurance policy procured by the late Jagdish Patel, who passed away due to a brain haemorrhage. Following his death, his wife, Rajkumari Patel, and other appellants filed a claim under the policy for the outstanding loan amount. However, the insurer, ICICI Prudential, denied the claim, citing non-disclosure of Mr. Patel's pre-existing medical conditions, including hypertension and a history of Percutaneous Trans-Luminal Coronary Angioplasty (PTCA).

The initial complaint by the appellants was partially upheld by the District Consumer Disputes Redressal Forum, which found the insurer guilty of deficiency in service. However, this decision was overturned by the Chhattisgarh State Consumer Disputes Redressal Commission, which concurred with ICICI Prudential's stance that the policy was void due to the insured's failure to disclose critical health information at the time of the policy issuance.

Upon further appeal, the NCDRC upheld the State Commission's decision, emphasizing the insured's duty to disclose all material facts truthfully. The judgment referenced several Supreme Court precedents that highlight the necessity of full disclosure in insurance contracts. The NCDRC reiterated that any concealment or misrepresentation of material information could render an insurance policy void, as the insurer relies heavily on the insured's declarations to assess risk.

The ruling serves as a reminder to policyholders about the importance of transparency and honesty when entering into insurance contracts. It also highlights the insurer's right to repudiate claims if it is found that the insured has withheld material information that could influence the insurer's decision to issue the policy.

Bottom Line:

Insurance Law - Doctrine of uberrima fides - Insured's duty to disclose all material facts truthfully in insurance contracts - Non-disclosure of pre-existing ailments can lead to repudiation of claims.

Statutory provision(s): Consumer Protection Act, 2019; Insurance Act, 1938

This decision reinforces the foundational principles of insurance law and underscores the critical role of full disclosure by the insured, ensuring that the integrity of insurance contracts is maintained.

Rajkumari Patel v. ICICI Prudential Life Insurance Company Limited, (NCDRC)(New Delhi) : Law Finder Doc Id # 2817554